Another set of eyes on this 16 Unit Deal

[Joshua Uelmen]

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Hey everyone, I'm looking at a 16 unit deal right now outside of Oshkosh, Wisconsin.  15 Units are rented at $400 and one of them (onsite manager) is rented at $375.  There are 2 - 8 unit buildings and all of them are 1/1.  With some updates rents could be pushed to $475.  For the area and rent my property manager suggested a reasonable price would be $450,000.  The long wall of 1 building is deflected about 4-6" from top to bottom (top pushing in).  The 4 external concrete stair wells need to be repoured as well.  Due to this my property manager suggested $410,000 would be a safe offer to start with the intent that we could counter to $425,000.  

I have a few items I'd like some input on for this deal. To start I'm concerned with the concrete work that would need to be done within a few years especially since the cash flow would be put towards repaying the HELOC I would use for the down payment. Secondly, I have no information on the lease terms as of yet. The realtor I am working with tells me we should make the offer now contingent on the foundation inspection and the lease audit. This feels backwards to me but I haven't done a commercial deal as of yet. It may be my engineer background getting the best of me but wanted to see what you guys thought.

Thanks in advance for your input! 

[Nathan Gesner]

An offer to purchase should include an inspection phase. During the inspection phase, you are able to inspect the property as well as records for the tenants. Make sure there's plenty of time to inspect, get a second opinion where needed, and then negotiate an changes.